A Freedom of Information (FoI) request from a former pensions minister has revealed a significant increase in the proportion of home loans arranged to last into retirement.
Ex-MP Steve Webb, now a partner at the pension consultants LCP, says the number of home loans stretching into borrowers’ retirement has jumped from 31% in Q4 2021 to 42% in Q4 2024.
Webb’s FoI followed a Bank of England financial policy report that included mortgage data for the fourth quarter of 2023. Webb requested the corresponding data for the fourth quarter of the previous two years.
The Bank of England's data shows that in the final three months of 2021, some 31% of new mortgages had an end date beyond state pension age.
Two years later, some 42% of new mortgages had this end date during retirement, suggesting a rise in popularity of longer-term loans.
Across the final quarters of all three years, nearly 300,000 new mortgages were in this category.
Among 30- to 39-year-olds, who would typically be expected to be taking out their first mortgage, 30,943 home loans were arranged to last beyond state pension age, with 39% of those granted in the last three months of 2023. This compared with 23% two years earlier.
The figures were higher for 40- to 49-year-olds, with 32,305 new mortgages, or 57% of the market, arranged beyond typical retirement age. In 2021 the proportion was 42%.
Older age groups were more likely to have home loans that stretched beyond retirement, but the numbers were far smaller.
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